STRAYER EDUCATION INC

FORM
8-K
(Current report filing)

Filed 10/30/14 for the Period Ending 10/30/14

Address
Telephone
CIK
Symbol
SIC Code
Industry
Sector
Fiscal Year

2303 DULLES STATION BOULEVARD

HERNDON, VA 20171
703-561-1600
0001013934
STRA
8200 - Services-Educational Services
Schools
Services
12/31

http://www.edgar-online.com
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 30, 2014

Strayer Education, Inc.

(Exact name of registrant as specified in its charter)

MARYLAND
(State or other jurisdiction of
incorporation or organization)

0-21039
(Commission File Number)

2303 Dulles Station Boulevard

Herndon, VA
(Address of principal executive offices)

52-1975978
(I.R.S. Employer
Identification Number)

20171
(Zip Code)

(703) 561-1600
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.

Results of Operations and Financial Condition.

On October 30, 2014, Strayer Education, Inc. (the Company or Strayer) issued a press release announcing its financial results for the
quarter ended September 30, 2014. A copy of the press release is furnished as Exhibit 99.1 hereto and is hereby incorporated by reference into
this Item 2.02.
The information contained in Exhibit 99.1 is deemed furnished under this Item, and shall not be deemed filed with the Securities and
Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as
amended.
Item 9.01.

Financial Statements and Exhibits.

(a) Not applicable.

(b) Not applicable.
(c) Not applicable.
(d) Exhibits.
The exhibits required by this item are set forth on the Exhibit Index attached hereto.
Exhibit
Number
99.1

Description
Press Release, dated October 30, 2014

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
STRAYER EDUCATION, INC.
Date: October 30, 2014

By: /s/ Mark C. Brown

Mark C. Brown
Executive Vice President and Chief Financial Officer

Exhibit 99.1

Strayer Education, Inc. Reports Third Quarter 2014 Revenues and Earnings; and Fall Term 2014 Enrollments
HERNDON, Va.--(BUSINESS WIRE)--October 30, 2014--Strayer Education, Inc. (Nasdaq: STRA) today announced financial results for the
three and nine months ended September 30, 2014. Financial highlights are as follows:
Three Months Ended September 30

Revenues for the three months ended September 30, 2014 decreased 8% to $100.8 million, compared to $110.0 million for the same
period in 2013, principally due to lower enrollment and lower revenue per student.

Income from operations was $9.2 million compared to $6.6 million for the same period in 2013, an increase of 39%. Income from
operations for the quarter includes a $1.5 million non-cash adjustment to reduce the Companys liability for losses on facilities no
longer in use. Operating income margin was 9.1% compared to 6.0% for the same period in 2013.

Net income was $5.0 million compared to $3.1 million for the same period in 2013, an increase of 57%. Net income for the quarter
includes $0.9 million in after-tax benefits from the adjustment to the Companys liability for losses on facilities no longer in use.

Diluted earnings per share was $0.46 compared to $0.30 for the same period in 2013, an increase of 53%. Diluted earnings per share for
the quarter includes $0.09 per share in after-tax earnings related to the reduction of the Companys liability for losses on facilities no
longer in use. Diluted weighted average shares outstanding increased 1% to 10,663,000 from 10,552,000 for the same period in 2013.

Nine Months Ended September 30

Revenues for the nine months ended September 30, 2014 decreased 13% to $330.0 million, compared to $379.5 million for the same
period in 2013, principally due to lower enrollment and lower revenue per student.

Income from operations was $59.1 million compared to $62.8 million for the same period in 2013, a decrease of 6%. Income from
operations for the nine months ended September 30, 2014 includes a $3.9 million, non-cash adjustment to reduce the Companys
liability for losses on facilities no longer in use. Operating income margin was 17.9% compared to 16.5% for the same period in 2013.

Net income was $33.4 million compared to $35.4 million for the same period in 2013, a decrease of 6%. Net income for the nine
months ended September 30, 2014 includes $2.3 million in after-tax benefits from the adjustment to the Companys liability for losses
on facilities no longer in use.

Diluted earnings per share was $3.15 compared to $3.32 for the same period in 2013, a decrease of 5%. Diluted earnings per share for
the nine months ended September 30, 2014 includes $0.22 per share in after-tax earnings related to the reduction of the Companys
liability for losses on facilities no longer in use. Diluted weighted average shares outstanding decreased slightly to 10,622,000 from
10,646,000 for the same period in 2013.

Balance Sheet and Cash Flow

At September 30, 2014, the Company had cash and cash equivalents of $150.5 million. The Company generated $62.1 million from operating
activities in the first nine months of 2014 compared to $72.2 million during the same period in 2013. Capital expenditures were $4.1 million for
the nine months ended September 30, 2014 compared to $7.1 million for the same period in 2013.
The Company is party to a revolving credit and term loan agreement. This credit facility, which is secured by the assets of the Company,
provides a $100.0 million revolving credit facility and a $125.0 million term loan facility with a maturity date of December 31, 2016. At
September 30, 2014, the Company had $119.5 million outstanding under its term loan and no outstanding balance under its revolving credit
facility.
The Company had $70.0 million of share repurchase authorization remaining at September 30, 2014. No shares were repurchased in the third
quarter of 2014.
For the third quarter of 2014, bad debt expense as a percentage of revenues was 3.6% compared to 4.5% for the same period in 2013. Days
sales outstanding was 16 days at the end of the third quarter of 2013 and 2014.

Student Enrollment
Total enrollments at Strayer University for the 2014 fall term decreased 2% to 42,189 students compared to 43,192 students for the same term
in 2013. Across the Strayer University campus and online system, new student enrollments increased 5%, while continuing student enrollments
decreased 4%.
Capital Allocation
The Company announced today that its Board of Directors amended its share repurchase program by extending the deadline for use of the $70
million remaining under its current authorization to December 31, 2015. The Company intends to conduct such purchases, if any, in
compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. This share repurchase program may be modified,
suspended or terminated at any time by the Company without notice.
Common Stock and Common Stock Equivalents
At September 30, 2014, the Company had 10,903,341 common shares issued and outstanding, including 332,050 shares of restricted stock. The
Company also had 200,000 restricted stock units outstanding, and 100,000 unvested stock options outstanding.
Conference Call with Management
Strayer Education, Inc. will host a conference call to discuss its third quarter 2014 earnings at 10:00 a.m. (ET) today. To participate on the live
call, investors should dial (877) 303-9047 10 minutes prior to the start time. In addition, the call will be available via live webcast. To access
the live webcast of the conference call, please go to www.strayereducation.com 15 minutes prior to the start time of the call to register.
Following the call, the webcast will be archived and available at www.strayereducation.com .
About Strayer Education, Inc.
Strayer Education, Inc. (Nasdaq: STRA) is an education services holding company that owns Strayer University. Strayers mission is to make
higher education achievable for working adults in todays economy. Strayer University is a proprietary institution of higher learning that offers
undergraduate and graduate degree programs in business administration, accounting, information technology, education, health services
administration, public administration, and criminal justice to working adult students. Strayer University also offers an executive MBA online
and corporate training programs through its Jack Welch Management Institute. Strayer University is committed to providing an education that
prepares working adult students for advancement in their careers and professional lives. Founded in 1892, Strayer University is based in
Washington, D.C. and accredited by the Middle States Commission on Higher Education, 3624 Market Street, Philadelphia, PA 19104. (267284-5000). The Middle States Commission on Higher Education is an institutional accrediting agency recognized by the U.S. Secretary of
Education and the Council for Higher Education Accreditation.
For more information on Strayer Education, Inc. visit www.strayereducation.com and for Strayer University visit www.strayer.edu .

Forward-Looking Statements
This press release contains statements that are forward-looking and are made pursuant to the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the Reform Act). Such statements may be identified by the use of words such as expect, estimate,
assume, believe, anticipate, will, forecast, plan, project, or similar words. The statements are based on the Companys current
expectations and are subject to a number of assumptions, uncertainties and risks. In connection with the safe-harbor provisions of the Reform
Act, the Company has identified important factors that could cause the Companys actual results to differ materially from those expressed in or
implied by such statements. The assumptions, uncertainties and risks include the pace of growth of student enrollment, our continued
compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as regional accreditation standards and state
regulatory requirements, rulemaking by the Department of Education and increased focus by the U.S. Congress on for-profit education
institutions, competitive factors, risks associated with the opening of new campuses, risks associated with the offering of new educational
programs and adapting to other changes, risks relating to the timing of regulatory approvals, our ability to implement our growth strategy, risks
associated with the ability of our students to finance their education in a timely manner, and general economic and market conditions. Further
information about these and other relevant risks and uncertainties may be found in the Companys Annual Report on Form 10-K for the fiscal
year ended December 31, 2013 and in its subsequent filings with the Securities and Exchange Commission, all of which are incorporated herein
by reference and which are available from the Commission. We undertake no obligation to update or revise forward-looking statements.

STRAYER EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
For the three months ended
September 30,
2013
2014
Revenues
Costs and expenses:
Instruction and educational support
Marketing
Admissions advisory
General and administration
Total costs and expenses
Income from operations
Investment income
Interest expense
Income before income taxes
Provision for income taxes
Net income
Earnings per share:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted

110,031

For the nine months ended

September 30,
2013
2014

100,756

63,673
23,077
5,188
11,472
103,410
6,621
1
1,391
5,231
2,082
3,149

$
$

0.30
0.30

10,510
10,552

379,517

55,927
20,514
4,071
11,028
91,540
9,216
42
1,311
7,947
2,994
4,953

$
$

0.47
0.46

10,571
10,663

329,971

208,405
57,026
15,751
35,538
316,720
62,797
1
4,024
58,774
23,392
35,382

174,839
50,188
12,623
33,198
270,848
59,123
45
3,945
55,223
21,810
33,413

$
$

3.34
3.32

$
$

3.17
3.15

10,608
10,646

10,555
10,622

STRAYER EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
December
31,
2013

September
30,
2014

ASSETS
Current assets:
Cash and cash equivalents
Tuition receivable, net
Other current assets
Total current assets
Property and equipment, net
Deferred income taxes
Goodwill
Other assets
Total assets

94,760
15,842
16,738
127,340
94,421
17,129
6,800
8,576
254,266

38,527
2,569
656
281
3,125
45,158
118,750
51,456
215,364

150,471
15,712
16,497
182,680
84,403
15,209
6,800
6,392
295,484

LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses
Income taxes payable
Deferred revenue
Other current liabilities
Current portion of term loan
Total current liabilities
Term loan, net of current portion
Other long-term liabilities
Total liabilities
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.01, 20,000,000 shares authorized; 10,797,464 and 10,903,341 shares issued and outstanding at December 31, 2013
and September 30, 2014, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Total stockholders' equity
Total liabilities and stockholders' equity

108
7,137
31,629
28
38,902
254,266

47,713
1,040
4,258
281
5,469
58,761
114,063
44,942
217,766

109
12,383
65,042
184
77,718
295,484

STRAYER EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
For the nine months ended
September 30,
2013
2014
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of gain on sale of assets
Amortization of deferred rent
Amortization of deferred financing costs
Depreciation and amortization
Deferred income taxes
Stock-based compensation
Changes in assets and liabilities:
Tuition receivable, net
Other current assets
Other assets
Accounts payable and accrued expenses
Income taxes payable and income taxes receivable
Deferred revenue
Other long-term liabilities
Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment
Net cash used in investing activities
Cash flows from financing activities:
Payments on term loan
Repurchase of common stock
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents - beginning of period
Cash and cash equivalents - end of period

Non-cash transactions:
Purchases of property and equipment included in accounts payable

CONTACT:
Strayer Education, Inc.
Mark C. Brown, Executive Vice President and Chief Financial Officer
703-247-2514
or
Dan Jackson, Senior Vice President and Treasurer
703-713-1862
[email protected]

35,382

33,413

(210)
(216)
585
18,561
(3,503)
8,398

(210)
(754)
585
15,782
(514)
7,058

3,576
1,668
(2)
188
6,591
769
374
72,161

1,813
(739)
147
10,215
(27)
8,108
(12,764)
62,113

(7,115)
(7,115)

(4,058)
(4,058)

(2,344)
(24,999)
(27,343)
37,703
47,517
85,220

(2,344)
(2,344)
55,711
94,760
150,471

274

583